[After CB Issuance] Why CBI's Profit Rates Differ Even When Sold on the Same Day

[Asia Economy Reporter Hyunseok Yoo] As the 3rd tranche of convertible bonds (CB) issued by CBI (formerly Cheongbo Industry) is converted into shares, investors are expected to record returns ranging from 400% to 1000%. The difference in returns despite being the same CB is due to the call option (put right), which caused a difference in the purchase price.

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 13th, CBI announced on the 9th that the 3rd tranche of CB will be converted into shares. The scheduled listing date is the 5th of next month.

CBI issued CBs worth 4 billion KRW last July to raise operating funds. The nominal and maturity interest rates were 0% and 1.6%, respectively. The issuance price at that time was 2,040 KRW, and the number of shares was 1,960,784.

The issuance price and conversion amount were adjusted once to 408 KRW and 9,803,920 shares, respectively. The reason was a stock split. In June, the par value was changed from 500 KRW to 100 KRW. Due to this, trading is currently suspended but is scheduled to resume from the 28th.

In particular, since the entire 3rd tranche of CB will be converted into shares this time, there are concerns about share dilution. The amount converted corresponds to 23.97% of the total 40,893,855 shares.

After the conversion of this CB into shares, investors are expected to gain substantial profits. The current stock price is 22,750 KRW, which is about 4,550 KRW when adjusted for the stock split.

However, returns may vary by investor due to the call option. In December last year, CBI signed a stock transfer agreement, and in January, the largest shareholder changed to Growth & Value 13th Fund. As the company's ownership changed, financial investors (FI) acquired shares held by the largest shareholder's special related parties.

At that time, Stadium 1st Fund acquired shares held by CEO Ahn Sang-wook's relatives and executives. Also, Stadium 3rd Fund purchased part of the 3rd tranche CB held by CEO Ahn and executives. The 3rd tranche CB includes a clause allowing the issuing company or a designated party to sell up to 50% of the bonds under the call option.

The 3rd Fund purchased 980,392 shares at 4,437 KRW per share (10.70% stake). This is more than double the issuance price of 2,040 KRW. Since CBI's stock price was between 8,000 and 10,000 KRW at the time, it is interpreted that a premium was applied.

Considering this, if the CB converted into shares is sold immediately, existing investors are expected to achieve a return of 1,015.19%, while Stadium 3rd Fund is expected to have a return of 412.97%.

This content was produced with the assistance of AI translation services.